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HERON THERAPEUTICS, INC. /DE/ (HRTX)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 net product sales were $40.78M (+19.1% YoY) and GAAP net income was $3.66M ($0.02 EPS), marking profitability for the quarter; product gross margin was 74.9%, up from 71.1% in Q4 2023 .
  • Acute Care momentum: ZYNRELEF delivered record Q4 net revenue of $8.46M (+48.5% YoY) and APONVIE reached $1.93M (+311% YoY), while Oncology net revenue rose to $30.39M (+8.3% YoY) with CINVANTI at $26.87M (+10.7% YoY) .
  • 2025 guidance introduced: Net revenue $153–$163M and adjusted EBITDA $0–$8M; FY 2024 adjusted EBITDA delivered at $8.6M, above prior 2024 guidance of $2–$5M, underscoring improved operating efficiency .
  • Key catalysts for 2025: NOPAIN Act separate payment starting April 1, 2025, VAN device to simplify ZYNRELEF prep and speed withdrawal, and expanded label indications; management expects ZYNRELEF inflection mid-year as VAN (200mg) fully rolls out and CrossLink reach strengthens .
  • Legal overhang reduced: U.S. District Court ruled in favor of Heron, upholding validity of CINVANTI patents expiring in 2035, supporting oncology cash flow durability .

What Went Well and What Went Wrong

What Went Well

  • “We successfully achieved profitability not only for the fourth quarter of 2024, but also for the full year,” highlighting net income of $3.6M in Q4 and $8.6M adjusted EBITDA in 2024 .
  • ZYNRELEF momentum: “Record net revenues of $8.5M in Q4… achieved with minimal impact from the VAN launch,” suggesting further upside as VAN and NOPAIN tailwinds build .
  • Gross margin expansion and OpEx control: Product gross margin improved to 74.9% in Q4; SG&A down vs 2023, with R&D also lower; management emphasized cash burn of ~$21M in 2024 and operational efficiency .

What Went Wrong

  • Competitive and ASP pressure ahead in Oncology: Management adopted “a more conservative approach to our outlook for CINVANTI,” anticipating increased competition and lower ASP despite unit growth .
  • Near-term lumpiness in cash flow/EBITDA: CFO flagged quarterly variability due to legal spend and PFS development; early 2025 may see uneven quarters before steadier exit run-rate .
  • SUSTOL declined YoY in Q4 (-7.4%), tempering Oncology growth mix despite CINVANTI strength .

Financial Results

Sequential performance (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Net Product Sales ($USD Millions)$36.024 $32.810 $40.781
Gross Profit ($USD Millions)$25.506 $23.352 $30.552
Product Gross Margin (%)71% 71% 74.9%
Net Income (Loss) ($USD Millions)$(9.235) $(4.848) $3.663
Diluted EPS ($)$(0.06) $(0.03) $0.02

YoY comparison (Q4)

MetricQ4 2023Q4 2024
Net Product Sales ($USD Millions)$34.233 $40.781
Gross Profit ($USD Millions)$24.348 $30.552
Product Gross Margin (%)71.1% 74.9%
Net Income (Loss) ($USD Millions)$(10.724) $3.663
Diluted EPS ($)$(0.07) $0.02

Segment breakdown (Q4)

Segment/Brand Net Revenue ($USD Millions)Q4 2023Q4 2024
Acute Care Total$6.164 $10.389
APONVIE$0.470 $1.932
ZYNRELEF$5.694 $8.457
Oncology Total$28.070 $30.392
CINVANTI$24.270 $26.873
SUSTOL$3.800 $3.519
Total Net Revenue$34.234 $40.781

KPIs and balance sheet highlights

KPIQ4 2024
Cash & Short-Term Investments ($USD Millions)$59.3
Cash ($USD Millions)$25.802
Short-Term Investments ($USD Millions)$33.481
Accounts Receivable, Net ($USD Millions)$78.881
Inventory ($USD Millions)$53.160
Total Operating Expenses – Q4 ($USD Millions)$26.379
FY 2024 Adjusted EBITDA ($USD Millions)$8.610

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Revenue ($USD Millions)FY 2025N/A$153–$163 New
Adjusted EBITDA ($USD Millions)FY 2025N/A$0–$8 New
Net Revenue ($USD Millions)Q4 2024$37–$43 (given on Nov 12) Actual: $40.781 Achieved (within range)
Adjusted EBITDA ($USD Millions)FY 2024$2–$5 (Q3 update) Actual: $8.6 (beat) Raised vs delivered

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
ZYNRELEF VAN deviceVAN PDUFA 9/23; prep time and sterility improvement; CrossLink training underway VAN approved; 400mg launched mid-Dec; 200mg targeted around April; early positive feedback; saved/returned ~15 accounts Accelerating adoption tailwind
NOPAIN Act reimbursementInclusion in proposed/final rule effective 4/1/2025; expected commercial payer follow-through Awareness tailwind; separate payment confirmed; expected to boost non-opioid adoption Strengthening policy tailwind
CrossLink co-promotion>561 reps trained; early surgeon introductions; building national reach ~800 reps; CrossLink accounts growing ~30% faster; coordination improving Expanding reach and velocity
Oncology ASP/competitionCompetitive market; quarterly fluctuations; maintaining share; legal timelines Conservative CINVANTI outlook; ASP pressure possible; tracking close to 2024; litigation victory reduces risk Stable units, ASP risk, legal de-risk
Gross margin and OpExMargin up to ~71%; OpEx reductions; adjusted EBITDA positive YTD Q4 margin 74.9%; SG&A and R&D lower; 2024 adjusted EBITDA $8.6M Sustained efficiency gains
APONVIE adoptionAccounts and daily units rising; systematic P&T wins strategy Continued account additions; pull-through expected to improve with CrossLink freeing rep time Building adoption trajectory
ZYNRELEF PFS (prefilled syringe)FDA submission targeted for 2026 Stability demo encouraging; launch targeted late 2026/1H 2027 Advancing development milestones

Management Commentary

  • CEO: “2024 was a milestone year… Zynrelef is poised for transformational growth, driven by its expanded label indications, the launch of the VAN, the approval of the NOPAIN Act, and the enhanced promotional reach of the Crosslink relationship.”
  • CEO: “We successfully achieved profitability… finished the quarter with net income of $3.6 million… net revenues reached $144.2 million… adjusted EBITDA of $8.6 million.”
  • CFO: “We grew revenue 13.6%, improved gross margin from 48.8% to 73.2% and grew gross profit by almost 71%… product gross profit for Q4 was $30.6 million or 74.9%.”

Q&A Highlights

  • ZYNRELEF performance and VAN impact: No inventory stocking; VAN launched mid-December with minimal Q4 impact; early account returns (~15) and broader launch of 200mg VAN around April signal stronger 2025 contribution .
  • Quarterly lumpiness: CFO expects some variability in early 2025 EBITDA/cash flow due to legal and PFS spend; overall run-rate similar to 2024 .
  • NOPAIN tailwind and CrossLink: NOPAIN’s inclusion boosts non-opioid awareness; CrossLink-linked accounts growing ~30% faster than non-CrossLink accounts .
  • Baker Brothers convert: Management plans meetings approaching May 2026; litigation clarity aids discussions .
  • PFS timing: Prefilled syringe targeted for launch late 2026/1H 2027 after promising stability demo batch results .

Estimates Context

  • S&P Global consensus for Q4 2024 EPS and revenue was not retrievable at time of analysis due to API limits; direct comparison to Wall Street consensus is unavailable. Management’s Q4 net revenue actual ($40.78M) fell within prior Q4 guidance of $37–$43M given on Nov 12, 2024 .

Key Takeaways for Investors

  • Profitability achieved in Q4 on 75% product gross margin and improved cost structure; FY 2024 adjusted EBITDA of $8.6M signals operational leverage heading into 2025 .
  • Acute Care is the growth engine: ZYNRELEF record quarter and APONVIE acceleration point to multi-pronged tailwinds (VAN, NOPAIN, CrossLink, expanded label) driving 2025 inflection, particularly post-200mg VAN rollout around April .
  • Oncology remains a cash-flow foundation with ASP risk: CINVANTI unit growth expected but price pressure possible; litigation win materially reduces generic risk through 2035 .
  • 2025 outlook is prudent: Net revenue $153–$163M and adjusted EBITDA $0–$8M reflect investment in legal/PFS and conservative Oncology assumptions; watch for upside if ASP holds and ZYNRELEF uptake accelerates .
  • Execution priorities: Scale CrossLink coordination, complete VAN transition (incl. 200mg), sustain gross margin gains, and drive APONVIE system-wide protocols to deepen usage .
  • Balance sheet: $59.3M in cash and short-term investments at year-end provides runway; Baker Brothers convert discussions are a medium-term capital structure catalyst .
  • Trading lens: Near-term catalysts include continued ZYNRELEF uptake (post-VAN), NOPAIN reimbursement starting April 1, 2025, and any updates on the convert and PFS program; monitor quarterly EBITDA variability tied to legal/PFS spend .